BullMarketRun

Gold has traded in a range between $1,619 and $1,629 so far today…as of 5:40 am Pacific, the yellow metal is up $2 an ounce at $1,624…Silver is ahead by 8 cents at $28.27…Copper has gained pennies to $3.44…Crude Oil is 38 cents higher at $90.16 while the U.S. Dollar Index is off one-tenth of a point at 82.69…

Silver Breakout

Silver appears to be in the early stages of a breakout, an event we’ve been predicting at BMR recently given the look of the chart and an extremely bullish COT structure with commercial traders reducing their short positions to record or near-record lows…Silver broke above its daily SMA-50 yesterday for the first time in more than four months…John is looking for confirmation of that move today, followed by a challenge of the next major area of resistance which is $29…as we’ve been mentioning, an historical opportunity has quite possibly opened up in Silver which could be a powerful “Wave 5″ move…we’d have to see Silver bust through the $32 area in order to confirm that a “Wave 5″ scenario is under way…below is a 6-month daily chart for Silver, and notice how RSI(14) is showing increasing momentum after breaking through resistance at the 50 level…the trend has turned bullish and buying pressure has picked up considerably…

Silver Stock Opportunities

Over the coming days, we’ll be providing charts and additional information on 10 Silver plays that are worthy of our readers’ due diligence…topping the list, not surprisingly, is BMR favorite Rainbow Resources (RBW, TSX-V) which has an excellent discovery opportunity at its International Property in the West Kootenay region of southeast British Columbia…the exploration target is a high-grade, near-surface deposit…a drill permit is expected any day now from the Ministry of Mines which will be followed by mobilization of the rig…Rainbow, which also has a Gold-Silver property in Nevada it’ll be drilling this year, has a powerful-looking chart which suggests a major breakout is looming in the August/September period…RBW is just the second British Columbia exploration story we’ve covered in a major way over the last three years – the first one was Richfield Ventures which became a 10-bagger for some of our readers as it made a major Gold-Silver discovery in the Blackwater District of central British Columbia and got taken out last year by New Gold Inc. (NGD, TSX-V) at around $10 per share…

Two other B.C. plays have made it onto our Silver list – RJK Explorations (RJX.A, TSX-V), exploring at Blackwater, and Hulda Silver (HDA, TSX-V) which is completing construction of a 200-tonne per day mill near Merritt for mining its Treasure Mountain deposit…the other seven Silver stocks are Alliance Mining (ALM, TSX-V), Puma Exploration (PUM, TSX-V), Wildcat Silver (WS, TSX), Arian Silver (AGQ, TSX-V), Orko Silver (OK, TSX-V), and producers Great Panther Silver (GPR, TSX) and Alexco Resources (AXR, TSX)…we’ll be starting with charts on the above situations tomorrow…

GoldQuest Mining (GQC, TSX-V)

While it’s still very early in the drilling game at Romero, GoldQuest Mining’s (GQC, TSX-V) world class hole reported yesterday (a 25-metre step-out to the east of its discovery hole) should convince investors that GQC has a potential monster-sized deposit on its hands and now’s not the time to be giving up your shares, especially if Gold and Silver strengthen considerably in the weeks ahead as we believe they will…below is an updated GQC chart from John with a new Fibonacci level after the stock blasted higher yesterday on volume of 5.3 million in just one hour and 15 minutes of trading after the halt was lifted…GoldQuest has also just announced this morning a $10 million private placement at $1.25 per share (no warrants) in an agreement with Dundee Securities on behalf of a syndicate of underwriters…the big money has wasted no time in jumping in after yesterday’s spectacular results…

TSX Gold Index

While Gold is doing well, and has broken above its down trendline, the TSX Gold Index still has some work to do to overcome its down trendline in place since June…patience is the name of the game here…

Today’s Markets

Asian markets were mostly higher overnight, though China continues to struggle as the Shanghai Composite slid 6 more points to close at 2104…European shares are mixed this morning while U.S. stock index futures are pointing toward a flat to slightly positive open on Wall Street…

CRB Index

Strength in the CRB Index gives us hope that the Venture Exchange will soon come to life…below is a 6-month daily chart of the CRB Index which shows a very obvious double bottom and increasing momentum…

Federal Reserve, ECB Face Crucial Tests This Week

Amid amid heightened expectations that they are moving toward new actions to tackle the fragile global economy, the Federal Reserve and the European Central Bank each face critical tests this week…the two-day FMOC meeting begins today while the the ECB meets Thursday, a week after Mario Draghi lifted expectations when he said the central bank would do “whatever it takes” to preserve the euro, within its mandate to keep inflation low…anticipation of such moves has spurred markets in the past, but they have deflated again afterward amid renewed sentiment that the fundamental problems in U.S. and European economies remain too deep-seated for central banks to fix…fueling investor skepticism now is the sentiment that the central banks are moving largely alone…leaders of both central banks, warning that monetary policy has its limits, are pressing elected politicians to do more to reduce uncertainty and bolster growth…

The Wall Street journal reported this morning that one of several options the ECB has is to purchase corporate or other private-sector securities – it can do so legally while the Fed generally, can’t…that would cleanse European bank balance sheets and make it easier for them to lend to small and medium-size businesses…and it would be a way for Draghi to take action without buying government bonds…

Euro Zone Unemployment Increases

Over 100,000 more people lost their jobs in the euro zone in June, pushing the region’s unemployment total to a record and adding pressure on the ECB  to take action at its monthly rate decision Thursday…the number of unemployed people in the currency bloc rose by 123,000 to 17.8 million in June, the highest level since records for the 17 nations were first compiled in 1995, the region’s statistics agency Eurostat said this morning…that meant 11.2% of the workforce was unemployed – the joint highest on record, after the estimate for May’s jobless rate was increased to 11.2% from 11.1%…

China Reaffirms Fiscal, Monetary Plans

China will step up policy fine-tuning in the third and fourth quarters of this year to support economic growth, although there are signs of stabilization in the economy, according to comments made by Premier Wen Jiabao and President Hu Jintao in round table discussions with business leaders and academics as reported today by the official Xinhua news agency…Wen affirmed the government’s resolve to maintain its long-standing controls on the property sector, while the government will take steps to improve the domestic environment and diversify its export market…Hu was also quoted as saying that China would increase fiscal and monetary policy support to the economy in the second half of the year…the comments are broadly in line with official pro-growth statements made in the wake of first half GDP data which showed the economy in the second quarter of 2012 had expanded at its slowest pace in more than three years…

South Korea, Taiwan Slow Down

Signs of economic weakness are emerging out of Asian tigers South Korea and Taiwan as the slowdown in key trading partner China takes a toll on the export-driven nations…the mainland is the biggest export destination for South Korea and Taiwan, accounting for 24 and 27%, respectively, of overall shipments…Taiwan’s economy unexpectedly contracted in the second quarter by 0.2% from the same period a year earlier…the country’s government yesterday cut its annual growth forecast to 2.1% from 3% as export growth forecast was slashed to 0.1% from 2.7%…in South Korea, industrial output in June contracted by 0.4% from May – the first month-on-month shrinkage in three months…

Brokers who have been hiding under their desks for the past few months, and retail investors who follow the crowd and have been too scared to buy a “speculative” junior exploration company in a challenging market environment (a time when fortunes are born), have missed out on some incredible opportunities recently.  One of the best examples, of course, is GoldQuest Mining (GQC, TSX-V) which has now jumped more than 20-fold in just over two months since first reporting a discovery (Romero) at its Escandalosa (Las Tres Palmas) Project in the Dominican Republic.  At BMR, we’ve been tracking GQC since the fall of 2010 and we were granted the first interview with Chairman Bill Fisher following the May 23 “game-changer” announcement from the company when it reported intersecting 231 metres grading 2.4 g/t Au (LTP-90) as well as significant Copper values.

The results keep getting better – today the company released assays from a short step-out hole (25 metres to the east of LTP-90) which graded 4.5 g/t Au and 1.3% Cu over a whopping 258 metres.  Romero right now is the story of the year for a Canadian junior exploration company, and it’s possible the real excitement has yet to even begin.  So much more drilling is yet to come at this property including deeper drilling that could get into some super-rich Gold and Copper.

Discoveries don’t happen overnight.  GoldQuest has been active in the DR for over a decade and has taken a multidisciplinary approach to exploration.  The DR is a rich geological environment, but sometimes finding that “monster” deposit can be like searching for a needle in a haystack.  It takes time.  Some smart techniques and proper interpretation brought into focus a high-priority area to drill and GoldQuest hit.  Now they’re following that trail of mineralization in hopes of delineating a world class deposit.

We see some similarities in approach with Rainbow Resources (RBW, TSX-V) and its International Silver Property in southeast British Columbia, where a much-anticipated drill permit is expected this week from the B.C. Ministry of Mines after an astute BMR reader did some “investigative research” through the Ministry last Friday.

GoldQuest was drilling into what it thought was a “honey zone”, and for good reason.  Rainbow will very soon be doing the same at the International, a property where extensive drilling “due diligence” has been carried out, not for months, but for several years – one major reason we’re so excited by this opportunity.  An incredible amount of homework has been completed.  High-grade, near-surface mineralization is the target.

When the first-ever holes get drilled into the International, just like they were at Romero, they won’t be “blind” holes – geologists have something very specific they’re aiming for (we’ve seen it for our own eyes during a recent site visit).   That greatly enhances the chances for a discovery.  Rainbow will be taking direct aim at an exposed quartz-dominated structure that includes massive fine-grained galena (typically rich in Silver content), pyrite and rare sphalerite.  The drill rig, as always, will be the “truth machine” but with such an inviting high-grade target, missing this would be like shooting wide (using a hockey analogy) just five feet in front of an open net.

This is a picture from the International of a small section of an impressive wall of exposed mineralization that looks exactly as you see over a length of one-and-a-half hockey rinks and up to a height of 8 feet. The drill rig will be positioned on a small hilltop above the structure with angled holes going into the heart of it, and vertical holes testing the system down-dip.

Rainbow is the second major British Columbia exploration story we’ve followed in the last three years.  The previous one was Richfield Ventures which became a 10-bagger (of course it got taken out by New Gold Inc.) from the time we first reported on it after a major Gold-Silver discovery at Blackwater in the central part of the province.

The “power of a discovery” can do wonders for a portfolio in any kind of market conditions.  Our advice for speculative investors looking for a “home run”, or at least some serious gains that can be made during an exciting drill program, is to stay focused on companies like Rainbow whose “blue sky” potential is completely intact and have a simple but compelling geological case for a potential discovery (a healthy chart also helps).  When the market turns, as we expect it will over the next few weeks, brokers and investors will be tripping over themselves to get in on the most exciting situations that are showing strong levels of interest and share price appreciation.  The time to get positioned is now, and we’ll be reviewing Rainbow and other opportunities in the days ahead.

GoldQuest has set the pace and the example.  Follow the best “discovery plays”.

11:40 am Pacific

The numbers from Romero just keep getting better – GoldQuest Mining (GQC, TSX-V) has just announced it has intersected a MONSTER hole in short step-out drilling at its Romero discovery – 258.03 metres grading 4.47 g/t Au and 1.27% Cu from 119.97 metres to 378 metres.  This is a world-class hole by any standard (25 metres to the east of the discovery hole and 50 metres west of recently reported hole LTP-92) and will undoubtedly result in a major gap-up in the share price when GQC resumes trading at 11:45 am Pacific.  More later today.

10:30 am Pacific

GoldQuest Mining (GQC, TSX-V) was halted an hour-and-a-half prior to the opening bell this morning, pending news.  At this point, it appears almost certain any news today will not come out until after the market close.

Up until this point in the GoldQuest story since news of the Romero discovery in late May, the stock has not once been halted despite some very significant assay results.  So whatever the news is that’s coming, our assumption is that it’s BIG.

On Saturday, Jon had a 1-hour conversation (interview) with Everton Resources‘ (EVR, TSX-V) President Andre Audet.  Everton is one of three juniors with large land positions (30,000 hectares, the maximum allowed) in the Dominican Republic.   Audet made it clear that majors are looking at the DR more seriously than ever, especially in light of GoldQuest’s discovery and recent exploration success enjoyed by Unigold Inc. (UGD, TSX-V) which has a promising project about 40 kilometres north of GQC’s Romero discovery.  Of course Everton is right on the doorstep of the Barrick/Goldcorp massive Pueblo Viejo deposit – a $4 billion project that’s scheduled to go into production this summer (both EVR and UGD are up today).

Our guess is that GoldQuest may surprise the market with some sort of a deal with a major.  The DR is one of the most attractive mining jurisdictions in the world (it’s easier to get things done there than in many other places), and supply is limited in terms of land and available properties.  While GQC is still in the very early stages at Romero, if it’s going to be a “monster” then it makes perfect sense to us that there could be a company out there that would want to strike a strategic arrangement of some sort with GQC before more drilling makes this a potentially much bigger deposit.  And Chairman Bill Fisher is just the kind of guy who would entertain such an arrangement if he thought it would help increase shareholder value, keep future share dilution to a minimum and provide immediate added credibility.

Below is an updated GoldQuest chart from John that’s looking very bullish in advance of the pending news.

Note: John and Terry do not hold share positions in GQC (Jon does).

Welcome to our site, or at least the initial version of it!  BMR has been online for nearly three years and strictly through word-of-mouth we have built a loyal following. 

We’re continuing with our plans to ultimately build a very unique investment and money-management resource site that goes considerably beyond what we have now.  While we focus a great deal on the Gold and Silver markets and trends in the global economy, and of course the technical health of the TSX Venture Exchange (CDNX), an important component of this site will always be original research on undiscovered junior exploration companies or small producers, mostly in the Gold and Silver exploration space, that offer very real and significant upside potential. We are extremely selective in the companies we feature and put forward to investors – we prefer quality over quantity.  However, investors must understand that these are still highly speculative situations and entail considerable risk, volatility and unpredictability.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. Always perform your own due diligence and please read our disclaimer at the bottom.

We use a combination of fundamental and technical factors in determining the value and potential of a stock.  In terms of fundamentals we look for a company with a superb project supported by strong management.  Management must possess integrity, solid ethics and a determination to succeed and build shareholder value.

At BullMarketRun (BMR) we approach the handling of money from a biblical perspective and this is an important topic we will be sharing with our readers (and listeners) as the site continues to develop. The Bible teaches so much about money and how to handle it and invest it -  there are literally thousands of verses on how we should handle the money and possessions that God entrusts us with.  By examining the life of Jesus and reading the Word of God, we can all become fully equipped to be successful investors and handle money wisely.  If it’s the other way around -  if you’re a slave to money by being in debt for instance, or if you don’t respect the value of money and spend it foolishly -  you’re in trouble and you’ll never be blessed financially.  We have a God who thinks big – He created the universe – and He wants us to think big  in every area of our lives.  When we handle money from a Biblical perpective (His money that we have been given stewardship of) He will bless our financial decisions and an increase of tenfold or a hundredfold is always possible.  This all begins, of course, with a personal relationship with Jesus Christ by accepting Him as your Lord and Savior and putting Him at the throne of your life.  It is the most important decision you’ll ever make.

God Bless,

Terry Dyer

Owner/Publisher, www.BullMarketRun.com

Disclaimer:

BullMarketRun.com (BMR) is completely independent from any companies it covers.  BMR accepts no compensation of any kind from any groups, individuals or corporations for coverage of any company mentioned on this site.  We accept no advertising either.  Our stock coverage is for informational and entertainment purposes only and must not be viewed or interpreted as “buy”, “sell” or “hold” recommendations. No investment opinion or other advice is being rendered on any stock or company. We strongly recommend that you consult with a qualified investment adviser, one licensed by appropriate regulatory agencies in your legal jurisdiction, and do your own due diligence and research before making any investment decisions. The stocks we cover, by definition, are highly speculative and potentially very volatile. Investors are cautioned that they may lose all or a portion of their investment if they make a purchase or short sale in these speculative stocks.  We are not Registered Securities Advisers. Our opinions can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Adviser operating in accordance with the appropriate regulations in your area of jurisdiction. It should be assumed that BMR personnel, writers and their associates may hold or dispose of or trade in positions in any securities mentioned herein at any time.  Owner/Publisher of BullMarketRun.com is Terry Dyer of Langley, British Columbia.

Forward Looking Statements:

All statements in BMR’s reports, other than statements of historical fact, may be forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.

Gold has traded between $1,616 and $1,624 an ounce so far today…as of 5:15 am Pacific, the yellow metal is down $6 an ounce at $1,618 after last week’s $40 advance that took it through some important resistance including a down trendline that has been in place since March..Silver is off 13 cents at $27.66…Copper is 2 pennies lower at $3.41…Crude Oil is down 36 cents at $89.77 while the U.S. Dollar Index is up more than one-tenth of a point at 82.89…

Silver Chart Update - Fasten Your Seat Belts!

For the past couple of weeks we’ve been stressing the historical opportunity in Silver with sentiment conditions opposite to what they were in the spring of 2011 when it completed a powerful “Wave 3″ move to $50 an ounce…RSI(2), which we’ve been monitoring closely on a chart going back to 1998, has now reversed from the extreme 10 level (it has dropped to that level on only one other occasion over the last decade and that was during the 2008 Crash)…with such strong support at $26, we believe Silver could be in the beginning stages of a very bullish “Wave 5″ move after a possibly just-completed “Wave 4″ corrective phase…”Wave 5″ won’t be confirmed, however, until Silver closes above $32 an ounce….the key immediate challenge for Silver is to break above its EMA-50 which is basically where it closed at Friday…

We’ll be reviewing 10 Silver stock situations beginning tomorrow that we believe could perform exceptionally well in a bullish Silver environment through the balance of this quarter and beyond…

Today’s Markets

Asian markets were mostly higher overnight, supported by expectations the Federal Reserve and the European Central Bank will deliver new measures to underpin their fragile economies…China’s Shanghai Index, however, slipped 18 points to finish at 2110, its lowest close since March 3, 2009…European shares are higher this morning to begin the new week while stock index futures in New York are pointing toward a slightly lower open on Wall Street…the Dow jumped 459 points or 3.6% over the last three trading sessions last week and finished Friday above 13,000 for the first time since May 3…

More Talk of Action To Prop Up The Euro Zone

The euro zone is at a decisive point and leaders will work with the European Central Bank (ECB) to demonstrate their commitment to the stability of the single currency, Eurogroup head Jean-Claude Juncker said in interviews with European newspapers yesterday…Juncker told Germany’s Sueddeutsche Zeitung and France’s Le Figaro that leaders would decide in the next few days what measures to take to tackle Spanish bond yields which last week touched euro-era highs…they had “no time to lose”,  he said…asked whether it was true that France wanted the bailout fund to buy government bonds, under an agreement made by euro zone leaders at their summit in June, but that Germany was resisting, Juncker answered: “I have no doubt that we will implement the agreements of the last summit…we still need to decide what we will do when…that depends on the developments of the next days”…the European bailout fund (the European Financial Stability Fund (EFSF) will work together with the ECB without affecting its independence, he said…”We will work in close agreement with the ECB, and we will, as (ECB President) Mario Draghi said, see results…I don’t want to drive expectations, but I must say, we have reached a decisive phase”…

Fed, ECB Prepare For Action

Most Fed watchers do not expect the Fed to announce a new quantitative easing, or asset purchase program, Wednesday, but it could take smaller steps and lay the groundwork for something more bold a month later…a front page story in the Wall Street Journal early last week, written by ace reporter Jon Hilsenrath, was widely believed to be leaked from the Fed to prep the market for potential Fed policy actions by the beginning of September at the latest…the ECB, reported to be considering a range of actions, may take some steps at its meeting Thursday toward resolving the euro zone’s problems, but certainly not all the steps that will be necessary or that the market would like to see right away – these things take time…there were news reports Friday that ECB President Mario Draghi was discussing a rate cut, a new liquidity program, and a plan to give a banking license to its bailout fund (European Stabilization Mechanism)…

Also This Week…

About a fifth of the S&P 500 500 and General Motors, AIG, Procter and Gamble, Kraft, Time Warner, Berkshire Hathaway and MasterCard are among the companies reporting second quarter earnings…auto makers report monthly sales Wednesday, chain stores report their July Sales Thursday, and this month’s all-important U.S. jobs number comes out Friday…

Venture Exchange – Close To A Breakout

It’s an important week for the CDNX which is on the verge of finally breaking through its daily EMA-20 which has provided stiff resistance since March…it’s critical for the Venture to clear this area in order for a real uptrend to finally begin and gain traction…as shown in John’s chart, the EMA-20 currently sits at 1193, just two points above where the Index closed Friday…RSI(14) is rapidly closing in on resistance and a convincing move through 50 would be very bullish…there has been a significant change in CDNX buying pressure in recent sessions, a sign that this time the Index will leave the EMA-20 behind in the dust…

Bullish Canadian Dollar Bodes Well For Venture Breakout

The commodity-sensitive Canadian Dollar continues to gain momentum which supports the argument that the Venture Exchange is gearing up for a significant upside move…of particular note is the fact that the Dollar’s 200-day moving average (SMA) has recently reversed to the upside – the last two times such a reversal occurred came in early 2007 and mid-2009…this is problematic for commodity bears as this kind of strength in the Dollar would not be occurring in an environment in which commodity prices were ready to tank…

“One Of The Greatest PM Stock Buying Opportunities Of All Times”

Technical analyst Clive Maund (www.CliveMaund.com) is calling it, “One of the greatest PM stock buying opportunities of all time“…Maund’s article, posted yesterday, is a powerful piece utilizing half a dozen charts…his site is worth subscribing to, so with that plug we don’t think he’ll mind if quote two sentences from his article pertaining to a 4-year chart he posted for the Gold Miners Bullish % Index…the chart “reveals that sentiment towards Gold stocks is still at abysmally low levels, at its lowest – and close to -  the 2008 market crash trough…and a crash is looking less likely now that we can hear the money pumps gurgling as they are primed for ‘the big one’…this chart shows that the sheep have now flocked together down at the other end of the field, the bearish end, and if they don’t get away from there fast they are going to be dragged into the fleecing shed and giving a right going over once again”…

GoldQuest Mining (GQC, TSX-V)

GoldQuest Mining (GQC, TSX-V) was halted at 5:07 am Pacific, pending news…so this could be a very interesting day…

Everton Resources (EVR, TSX-V)

As our readers are well aware, the Dominican Republic is a geological hot-spot and GoldQuest Mining’s (GQC, TSX-V) Romero discovery has only reinforced that…Unigold Inc. (UGD, TSX-V) is making excellent progress as well at its Candelones Project to the north of Romero…on Saturday, we spoke with Everton Resources‘ President and CEO Andre Audet whose company holds a large land position immediately adjacent to the massive Pueblo-Viejo deposit (Barrick/Goldcorp) which is scheduled to go into production next month…there’s no question Everton is going to benefit from the success of GoldQuest and Unigold, and what we see unfolding for EVR is a joint-venture deal(s) – possibly with a major – that will allow for exploration and drilling to resume on its promising land package…just a dozen holes have been drilled at EVR’s APV Property next to Pueblo-Viejo – only anomalous results were returned (albeit some of them encouraging), but 90% of that property is still wide open…accumulation has been occurring in the stock which was up a penny Friday on one of the highest volume days of the year (nearly 700,000 shares, all exchanges)…as John shows below, the chart is starting to show some strength after a long decline that appears to have ended at a nickel…

Our interview with Everton’s Audet will be posted in the coming days…

Seafield Resources (SFF, TSX-V)

Seafield reported a strong infill hole result this morning from its Miraflores deposit in Colombia – 161.15 metres grading 3.23 g/t Au including 60 metres of 5.48 g/t Au (the longer intersection, from 183 to 345.15 metres’ depth, featured several high-grade 2-metre samples including 23.35 g/ Au, 31.85 g/t Au, 21.8 g.t Au, and 56.73 g/t Au)…the hole continues to confirm the continuity and geometry of high-grade mineralization in the veins and matrix inside the breccia…the deposit currently hosts a NI 43-101 compliant measured and indicated resource of 77.8 million tonnes averaging 0.8 g/t Au for contained Gold of 1.9 million ounces and an inferred resource of 5.5 million tonnes averaging 0.6 g/t Au for 103,043 ounces of contained Gold, using a 0.3 g/t Au cut-off grade…

Kirkland Lake Gold (KGI, TSX)

Producer Kirkland Lake Gold (KGI, TSX) appears to have formed a double bottom on the charts and has significant upside potential should Gold continue to move higher this quarter…below is a 2.5-year weekly chart from John…

Note: Jon and John do not hold positions in EVR, SFF or KGI.  Terry holds a position in SFF.

TSX Venture Exchange And Gold-Silver

The Venture Exchange appears to have put in a double bottom after sliding as low as 1163 last Tuesday and rebounding modestly as the week progressed, closing at 1191 Friday.  While that was still a 5-point loss for the week, the Venture is positioned for a very significant breakout in the coming days – a move above its daily EMA-20 (currently at 1193), as Gold has just done, which has provided key resistance for the Venture since this brutal downtrend took hold in the spring.  Below is John’s updated chart for the Venture.

New uptrends in Gold and Silver, fueled by clear indications of pending aggressive action from the European Central Bank and QE3 from the Federal Reserve, will give the Venture Exchange the lift it needs in our view to break out of a five-month malaise (fresh technical strength in the Canadian Dollar is also a bullish sign for the Venture).  Continued positive drill results from numerous companies as well as potential fresh discoveries over the summer could ignite a rally of significant (even historical) proportions.  What has happened over the last several months is like taking an elastic band and stretching it as far as it can go – it’s now ready to snap, so be prepared.  Sentiment levels have been extremely low and there is plenty of cash on the sidelines waiting to pile in at just the right time.  That’s when aggressive bull moves are born.

Europe is set to move toward a new round of joint bond buying to ease borrowing costs in Spain and Italy as German Chancellor Angela Merkel and French President Francois Hollande pledged yesterday to do “everything” to protect the euro.  They echoed European Central Bank President Mario Draghi’s vow Thursday to defend the euro as he urged (or warned) investors not to bet against him.  Draghi pledged to do “whatever it takes to preserve the euro and, believe me, it will be enough.”

Those are powerful words from a central bank president who must know he has the firepower at his disposal to back those words up, otherwise that statement would end up being counterproductive and the market would be like a shark smelling blood.   The French newspaper Le Monde reported that the ECB is preparing a plan to buy bonds in the secondary market in the coming weeks to be followed by purchases in the primary market by government-financed bailout funds.

Meanwhile, a front page story in the Wall Street Journal several days ago, written by ace reporter Jon Hilsenrath, was widely believed to be leaked from the Fed to prep the market for potential Fed policy actions as soon as this coming week or – at the very latest – by the beginning of September.  The Fed is growing increasingly impatient with economic growth, though it’s in a damned-if-it-does, damned-if-doesn’t position.  Expect a bit of a twist to this third round of “quantitative easing”, a drug that commodities and the Venture Exchange particularly enjoy.

It’s important to note, however, that while the Fed may be able to help give the U.S. economy a modest jolt, if indeed Ben Bernanke pulls another rabbit out of the hat, three are still three dragons that need slaying before the American economy can really start to gain traction – the Tax Cliff Dragon, the Regulatory Dragon, and the Obamacare Dragon.  Each is choking the U.S. economy and hopefully all three can be dealt with appropriately in November which means Americans will have to elect a new President.  Would another Ronald Reagan step forward, please?

Gold and Silver

It was a hugely significant week for Gold and Silver as the prospect of more monetary easing worldwide gave both a major lift.  Gold gained $40 an ounce to close at $1,624 while Silver jumped 46 cents to finish at $27.79.

On Thursday, Gold broke above the down trendline resistance in place since March.  This was confirmed Friday by another surge in volume.  It has also moved above both its daily EMA-20 and weekly EMA-20.  We’re now about to enter a period of seasonal strength for Gold (August and September).

Silver is also headed higher and John will update that chart Monday morning.

Copper was unchanged for the week at $3.43.  Crude Oil fell $1.70 to $90.13 while the U.S. Dollar Index ran into resistance at 84 and finished the week down nearly a point at 82.61.

The fact the greenback is now looking bearish is another bullish sign for commodities, though dollar strength the last couple of months has not been able to depress the Gold price – a pattern witnessed in other periods just before a major run in Gold.  Below is an updated U.S. Dollar Index chart from John.

Mineweb has reported that Hong Kong’s largest Gold storage facility, which can hold about 22% of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy. Hong Kong is emerging as a very important center for Gold, especially because it acts as a doorway to China. The current list of hubs include New York, Zurich and London, but there is a growing demand to set up an Asian hub for physical Gold storage as wealth departs socialist countries.

The “Big Picture” View Of Gold

As Frank Holmes so effectively illustrates at www.usfunds.com, Gold is being driven by both the Fear Trade and the Love Trade.  The transfer of wealth from west to east, and the accumulation of wealth particularly in China and India, is having a huge impact on Gold.

The fundamental case for Gold remains incredibly strong – currency instability and an overall lack of confidence in fiat currencies, governments and world leaders in general, an environment of historically low interest rates and negative real interest rates that won’t end anytime soon (inflation is greater than the nominal interest rate even in parts of the world where rates are increasing), money supply growth, massive government debt from the United States to Europe, central bank buying, flat mine supply, physical demand, investment demand, emerging market growth, geopolitical unrest and conflicts, and inflation concerns…the list goes on.  Massive central bank intervention appears increasingly likely to prevent a breakup of the euro zone and to kick-start the global economy.  It’s hard to imagine Gold not performing well in this environment.

Gold touched a high of $1,630 (resistance) this morning but backed off a little after a slightly stronger than expected U.S. GDP report released at 5:30 am Pacific (consumers, however, spent at their slowest place in a year)…as of 6:25 am Pacific, Gold is firming up again and has gained $11 an ounce to $1,627…Silver is 17 cents higher at $27.71…Copper is up 4 pennies to $3.42…Crude Oil is flat at $89.45 while the U.S. Dollar Index continues to struggle and is down one-quarter of a point to 82.61…

Yesterday, comments by ECB President Mario Draghi (he told a conference in London that the ECB was “ready to do whatever it takes” to preserve the single currency – “believe me, it will be enough” – gave precious metals a major shot in the arm…this morning, the highly anticipated U.S. GDP number for the second quarter came in slightly above expectations at 1.5% (Gold bulls were hoping for a somewhat weaker number to enhance the chances of near-term action from the Fed)…however, given Draghi’s hugely significant remarks yesterday, what we could be about to witness in the very near future is global “shock and awe” from the central banks in an effort to alleviate the euro zone situation and kick-start the world economy…the ECB, in effect, could be about to give the Fed the “cover” it needs to act with a U.S. election just a few months away…Draghi’s words, without significant action to back them up, would actually be counterproductive…

Below is an updated Gold chart from John based on yesterday’s close…Gold has broken above its downtrend line in place since March but important confirmation of a breakout is required – that could come today…

Silver is also close to a confirmed breakout but still needs another push to the upside…the daily SMA-50 is a key level to watch…

On the flip slide of the precious metals equation, the U.S. Dollar Index appears – temporarily at least – to have topped out around 84…it does have a strong support band, however, between 81 and 81.40, just above a rising 200-day moving average (SMA)…the Dollar Index recovered slightly immediately after release of the GDP data but has headed south again…

TSX Gold Index

Higher Gold prices couldn’t come at a better time for Gold producers, many of whom are struggling with their balance sheets as evidenced by Barrick Gold (ABX, TSX) which reported a 35% decline in quarterly profit yesterday…it also warned that capital costs on one of its biggest growth projects would come in much higher than forecast…

The TSX Gold Index, which closed at 290 yesterday, is currently down 36% from its high of 455 last September (interestingly, the Venture Exchange by comparison is off 33% during the same period)…below is an updated chart from John on the TSX Gold Index which stopped yesterday at its daily EMA-20, an important resistance level to monitor…

Gold Index-Venture Exchange Comparison

For now at least, the Venture Exchange is following the lead of the TSX Gold Index…we’d prefer to see the Venture setting the pace, but that’s a situation that could develop in the coming weeks…

Gold Canyon Resources (GCU, TSX-V)

John has one company chart to share this morning – Gold Canyon Resources (GCU, TSX-V), which recently closed a $15 million financing, continues to deliver strong results from its Springpole Project in northern Ontario…all indications are, the stock bottomed out in late April at $1 per share…it closed yesterday at $1.37 and appears to be gaining technical strength after enduring some heavy selling pressure…we don’t expect GCU to “blast off” just yet but it’s certainly worthy of keeping a close eye on…

Five months ago, Gold Canyon announced an updated NI 43-101-compliant resource estimate for Springpole which included an indicated mineral resource of 1.22 million ounces of Gold and 4.82 million ounces of Silver, and an inferred mineral resource of 2.45 million ounces of Gold and 11.58 million ounces silver (cut-off grade of 0.4 g/t Au)…tonnage and grades were reported as 30 million metric tonnes at 1.26 g/t Au and 5 g/t Ag for the indicated category, and 60 million metric tonnes at 1.27 g/t Au and 6 g/t Ag grams per tonne Silver for the inferred category…

Note: John, Jon and Terry do not hold positions in GCU.

Markets are solidly in the green across the board this morning after European Central Bank President Mario Draghi pledged to do “whatever was necessary to protect the euro zone from collapse, and believe me it will be enough“…those are strong words from a central bank president who must know he has the firepower within his means to back those words up…Gold and Silver are both close to a confirmed breakout…Gold is up $10 an ounce at $1,615 as of 6:05 am Pacific while Silver has added 28 cents to $27.62…Copper is up 3 pennies at $3.42…Crude Oil is $1.24 higher at $90.21 while the U.S. Dollar Index has fallen more than three-quarters of a point to 82.77…

Draghi’s comments come a day after European Central Bank member Ewald Nowotny said there was an argument for allowing the European Stability Mechanism, the bloc’s permanent bailout fund, to borrow without limit from the ECB…together, such chatter has convinced many traders and investors that the ECB would soon wade in to ensure fiscally-strapped nation’s borrowing costs did not remain at unsustainable levels – potentially creating a firebreak to eurozone contagion…this could remove a heavy weight bearing down on global sentiment and economic activity, and provide a spectacular boost for precious metals…

This is the best Gold has looked on the charts in quite some time…on the 6-month daily chart from John below, completed after yesterday’s trading, you’ll notice Gold is currently above its down trendline for the first time since the spring…Gold needs to close above this line today and tomorrow to give us confidence that a breakout is in progress…notice the recent increase in buying pressure which is accelerating again today…

Below is another technical look at Gold from John, a 1-year weekly chart…the declining weekly EMA-20 provides resistance at $1,617 while horizontal channel resistance exists at $1,630…

In recent days it appears the Venture Exchange has been completing a double bottom…as a reminder, what we all need to watch for is a move through the EMA-20 and the 1200 level – this would signal the end of the downtrend in place since the spring and the beginning of a bullish new phase…the chart below was completed after Tuesday’s close at 1166…the Index gained 6 points yesterday to finish at 1172…

Great Panther Silver (GPR, TSX)

A rising Silver market would be a tremendous boost for producer Great Panther Silver (GPR, TSX-V) which is currently resting at support on the charts as shown by John below…jumping in on a confirmed close above the down trendline would make sense…interestingly, GPR is currently resting at support just above its 200-week rising moving average (SMA)…

Orko Silver (OK, TSX-V)

Another Silver play that’s looking attractive on the charts at the moment is Orko Silver (OK, TSX) which closed up a nickel yesterday at $1.19…OK is less than half where it was back in March, and may have found a bottom at the $1 level where there was strong resistance during 2009…

Note: John, Jon and Terry do not hold positions in GPR or OK.

Precious metals are waking up this morning…as of 6:10 am Pacific, Gold has jumped $21 an ounce at $1,602…Silver is 34 cents higher at $27.30…Copper is up 4 pennies at $3.39…Crude Oil has added 53 cents to $89.03 while the U.S. Dollar Index has slipped one-third of a point to 83.63…a European Central Bank council member this morning suggested the possibility that Europe’s rescue fund (European Stabilization Mechanism) could get a banking license, allowing it to tap cheap ECB funding…this has given a boost to the euro and precious metals…

Britain’s Economy Continues To Slide

The UK economy contracted much more sharply than expected in the second quarter of the year, prolonging and deepening the country’s double-dip recession…output fell 0.7 per cent between the first and second quarter, more than the 0.2% fall economists had expected…the UK economy has contracted for three quarters in a row and is now smaller than when the coalition government took office in 2010, providing fuel to critics of its austerity measures…

O’Neill Sounds Off On Euro Zone

Jim O’Neill, Chairman of Goldman Sachs Asset Management who famously coined the term BRIC – Brazil, Russia, India and China – to describe the stars of the emerging markets in the 1990′s – told CNBC this morning that euro zone policymakers need to take a “United States of Europe” attitude to solving the debt crisis…“All 17 leaders could get together and commit to a euro bond some time in the future and hey presto, that would be the beginnings of a major resolution,” he stated…he admitted this was unlikely and policymakers would opt for their usual route of “muddling through”, saying their actions thus far were “not good enough”…he added that the markets were now priced for “almost permanent disaster”…

Today’s Markets

Futures in New York as of 6:10 am Pacific are pointing toward a strong open on Wall Street this morning after three consecutive triple-digit losses by the Dow…while Apple had a a rare earnings miss yesterday, Caterpillar – an industrial bellwether – reported quarterly earnings this morning that solidly outpaced analysts’ expectations…Asian markets were down slightly overnight while European shares are higher this morning…

Venture Exchange

The CDNX has fallen 30 points so far this week, but remains within a support band as shown by John’s chart below…while a select number of individual stocks can still perform well in this environment, the start of a broad-based uptrend will only begin once the Venture is able to climb above resistance at its daily EMA-20, currently at 1197…the Venture closed at 1166 yesterday, 12 points above its late June low…

“Discovery plays” is where the safety, excitement and upside potential is at the moment in the CDNX…GoldQuest Mining (GQC, TSX-V) is the best example of that, but certainly not the only one…John’s GQC chart was bang-on again yesterday as the stock ended a three-day slide with a gain of 13 cents to $1.10…over 33 million GoldQuest shares have traded over the last 9 sessions (all exchanges) for an average daily volume during that time of 3.3 million shares…

Also in the Dominican Republic, keep a close eye on Unigold Resources (UGD, TSX-V) which jumped a nickel yesterday to 37.5 cents…UGD has been reporting solid results from a property along the same belt as GQC’s Escandalosa to the north…

Canamex Resources (CSQ, TSX-V)

A stellar drill result last week from its Bruner Gold Property in central Nevada sent Canamex Resources (CSQ, TSX-V) flying from a low of 9.5 cents to a high of 44 cents…over 80 million shares have traded on Canadian exchanges over the last 5 trading sessions…the company has 68 million shares outstanding but 29 million warrants are also now in the money between 15 and 25 cents (23 million expire at 15 cents by December 31 of this year) which is likely helping to keep a lid on the stock price at the moment…CSQ closed yesterday at 31.5 cents – it has declined in three out of the past 4 sessions after last Wednesday’s news of an intercept grading 4.08 g/t Au over 118.1 metres…expect more consolidation in the near future as the stock continues to deal with the warrant issue, but CSQ could get more interesting as the summer progresses…below is a chart from John that gives a good picture of the current technicals…the stock appears to be in the early stages of a flag formation which we’ll continue to keep an eye on…

Rainbow Resources (RBW, TSX-V) Chart Update

Discovery plays is where the action is in the market right now, and Rainbow as we’ve been stating is in an excellent position to drill into a near-surface, high-grade discovery in the near future at its International Silver Property in the West Kootenays which has never been previously drilled…in the updated chart below from John, notice how RBW has outperformed the CDNX (thick blue line) this year and in the last five weeks in particular – a very encouraging sign…RBW has broken out above its daily EMA-20 as well as a recent downtrend in advance of the CDNX hopefully doing the same…

Note: Both John and Jon hold share positions in RBW while Jon holds a share position in GQC (Terry does not).